Crypto Ice and Fire: Trading volume falls to lowest level in 2021, whales continue to hoard BTC

The "519 crash" poured cold water on the hot crypto market, and the computing power of the entire Bitcoin network fell under the strong regulatory policy. Since March 2020, Bitcoin has gone through a magnificent price curve. Although the market has taken a sharp turn for the worse in the past month, with the emergence of new Bitcoin activities and the recognition of Bitcoin consensus by small countries, the crypto market has coexisted with ice and fire.

Sharp drop in temperature

With the 519 crash and strong regulatory policies, the hot crypto market has experienced a sharp cooling.

The latest data from CoinDesk Research shows that an average of $34.8 billion in bitcoin changed hands each day in the first eight days of June, compared with an unprecedented $67 billion on last month’s chart. So far, June’s average is the lowest for any month since December.

According to a recent report from Glassnode Insights, Ethereum transfer volume in USD terms has fallen 60% in two weeks. DeFi transaction volume and transaction count have declined this month. Transaction fees are back below $5 for the first time since January 1. Ethereum DeFi activity has slowed to 2020 levels.

In addition, under the background of the State Council's mention of cracking down on Bitcoin mining, various regions have issued relevant policies to rectify and clean up virtual currency mining. On May 25, the Inner Mongolia Development and Reform Commission issued the "Eight Measures on Resolutely Cracking Down on and Punishing Virtual Currency "Mining" Behavior (Draft for Comments)". On June 3, the Office of the Emergency Command Center for Energy Consumption Dual Control in Baotou City recently issued the "Announcement on Accepting Letters and Reports on Virtual Currency "Mining" Enterprises and Individuals", stating that it would fully accept letters and reports on virtual currency "mining" enterprises and individuals. On June 9, the Development and Reform Commission of Changji Hui Autonomous Prefecture, Xinjiang issued a notice on the immediate suspension of production and rectification of virtual currency mining enterprises, requiring the Xinjiang Zhundong Development Zone Management Committee to immediately order enterprises engaged in virtual currency mining to suspend production and rectify before 14:00 on June 9, and report the relevant suspension and rectification to the Development and Reform Commission. On the same day, the Qinghai Provincial Department of Industry and Information Technology issued a notice on the comprehensive closure of virtual currency "mining" projects, requiring all regions to clean up and rectify relevant virtual currency "mining" behaviors.

In this context, the computing power of the entire network has declined. According to the data from Spider Mining Pool on June 10, the computing power of the entire BTC network is 144.539EH/s, the mining difficulty is 21.05T, the current block height is 687001, and the theoretical income is 0.00000620/T/day. The computing power of the entire ETH network is 603.775TH/s, the mining difficulty is 7639.27T, the current block height is 12604022, and the theoretical income is 0.00264959/100MH/day.

In addition, at a U.S. Senate hearing on central bank digital currency, U.S. senators called on lawmakers to address the issue of cryptocurrencies head on, saying that cryptocurrencies require more regulation.

Whales are bullish?

Despite the mostly negative news on the market and policy fronts, data shows that Bitcoin whales have been buying Bitcoin since the price fell below the $40,000 mark last month, and have accumulated nearly $2 billion so far.

According to data from cryptocurrency analysis firm Santiment, Bitcoin whales with 100 to 10,000 BTC in their wallets began to accumulate after the price of BTC reached $37,000, causing the price of Bitcoin to recover to $39,000. Santiment also pointed out that as BTC whales continued to accumulate, retail investors sold their Bitcoin at low prices. According to the company, whale addresses with more than 1,000 BTC now hold more than 7.88 million BTC, the largest number held since March 14. Addresses holding less than 10 BTC only hold 2.65 million BTC, the smallest amount in the past six months, in contrast to whales' purchases.

In addition, the data shows that Ethereum's NVT ratio is currently on an upward trend in the past few days, but its average is still at a low level. The low NVT ratio indicates that ETH's network is currently undervalued, which means that the market value is more likely to appreciate than to decline.

In addition to on-chain indicators, Bitcoin's consensus seems to be gradually expanding. After El Salvador approved Bitcoin as legal tender, Panamanian Congressman Gabriel Silva also said that he was working on a proposal to include Bitcoin and other cryptocurrencies in the country's legal tender. Although the follow-up attitudes of other countries remain to be seen, Bitcoin is gaining more attention and discussion.

Millionaire investor Kevin O'Leary recently allocated 3% of his portfolio to BTC and said he has no plans to sell his BTC anytime soon. Kevin O'Leary also noted that 2021 will be a critical year for Bitcoin as more institutions look to enter the space, but concerns about energy consumption will keep them cautious.

According to the latest situation, driven by the Basel Accord news earlier, Bitcoin began to find more upside space. However, at the macro level, if the market wants to rebound quickly, rebuilding investment confidence is the key, and the Fed's interest rate decision and subsequent US inflation data may be an important basis for the market's next direction.